Wednesday, May 26, 2010

Treasuries... Full Circle

Paul Krugman points out that no matter how much some things have changed, Ten Year Treasury rates (though noisy) have remained the same (note: I am hesitant to agree with his argument... a lot of what has happend over the past 12 months [struggling global economy / geopolitical conflict / uncertainty, austerity measures, re-regulation] are all reasons why Treasury rates would stay low).

Anyhow, to Paul:

I posted this item, about the foolishness of people who believed that
fiscal expansion will actually be contractionary, because it will drive up interest rates
on May 2, 2009. Markets were actually closed that day; but on May 1, the interest rate on 10-year bonds was 3.17 percent. As of right now, the rate is 3.14 percent. Just saying.

Source: Yahoo


  1. And how is the corporate market doing there Kruggy? You know, the market that actually matters for growth?

  2. Corporate yields are down dramatically over the past 12 months (both investment grade and high yield)...

  3. The next leg of the crisis is here, the current market movements are highly deflationary. DOW 1000 is the target for the next 12-18 months IMO. The recovery was just a sham and a scam. The world economy must contract tremendously. Watch as the bubbles pop simultaneously all over the world.

  4. Fiscal expansion is contractionary because it misallocates resources - worse than they would be otherwise, that is.

    Interest rates are affected by many factors, not just government debt levels.